Wednesday, October 5, 2005

WeMedia -- We Invest

Susan Mernit asks why the investing and acquisitions are going to tools and platforms and not content/media. Rick Ducey says that the infrastructure changes the dynamics of how people participate, how content gets contributed. The platform drives the business model.

Paul Gionocchio points out that the newspapers are investing in the new media plays, in part because of the declining readership in their print publications. Points to Greensboro News & Record embracing blogs, it’s hard for publishers to have such a paradigm shift (from one-way conversation to a dialogue), but that they’re starting to see how much higher the page views are (which means that the inventory goes up).

Brad Feld — “in the 20 years I’ve been doing this, one thing has stayed the same: computers and software suck.” The challenge is that the content’s easy to create — organizing it, filtering it, etc. is hard. Platforms are necessary to streamline that. Google demonstrated the value of a business that’s 100% automated.

Brad Burnham takes a different view from Feld. Suggests that Skype’s acquisition — in light of Microsoft and Yahoo building their own VoIP apps — was about more than just the technology. Questions whether Google’s automated — pagerank, after all, piggybacks on people making links. If you try and build a network, can you really sell a network? The network isn’t owned by the platform company, it’s owned by the community — and if the network is sold to the evil empire, will the community sustain the network?

Feld “violently agrees” with Brad Burnham. Building a network — to the scale of tens of millions of people — brings its own revenue opportunities down the road.

Rafat Ali (from PaidContent.org) from the audience says that VCs don’t understand content, they understand technology. Feld says early advice he got was to invest in core technology that’s hard to duplicate — and uses the bubble from ’97 to 2001 as an example: after focusing on core tech, they started investing in a lot of things that looked like content (pets.com, wine.com anyone?).

Interesting back-and-forth discussing the difference between media and technology. Burnham: traditional models for investing in tech and media don’t work moving forward; services that enable those models are where the next phase of funding will focus. Ducey is similarly interested in middleware. Gionocchio: aggregating small audiences. Feld: stuff today that’s being used by a small number of people where the interaction is automated and user-generated are where the next stage of growth comes from.